UPSIDE POTENTIAL

Cessford Mannville S13S Pool

Waterflood Potential

Cumulative production from the Mannville S13S pool to date is 270,000 bbl. of oil, 635.4 MMcf of gas and 1,035,000 bbl. of water.  The original reservoir pressure was 1250 psi and is currently 375 to 400 psi.  From material balance the initial oil in place calculated at a volume of 2,265 mstb.  From production decline the remaining recoverable oil reserves are 66,000 stb.  The total primary production of 336,000 bbl. would represent 15% of the initial oil in place an average recovery for a solution gas drive reservoir.

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From empirical calculations, 620,000 bbl of waterflood recoverable reserves were estimated.  Based on a water injection rate of 600 bbl. per day, response should occur after one year with a peak oil production rate of 130 bbl. per day.

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The capital requirement to establish the waterflood would be limited to the re-completion of the 02/14-18 well as a water source by abandoning the Mannville S13S zone, perforate the Viking, install tubing and PCP pump, install power and install a flowline from the well to the injection pump.  The cost to re-complete and equip the source well would be $175,000.  All other required facilities are in place and operating.